I'm sorry to hear about that, that makes no sense, how could you be denied coverage. Good business practice would repair the problem, that is a lot cheaper then losing a $62,000 customer. This could be a legal issue.
Consumers have the ultimate power! You are responsible for getting your own satisfaction. Dump the current dealer you are seeing, THEY do not care about you. If they did, you would not be in this situation. See another Lincoln Mercury Dealer!
Also, as it was mentioned in comments made before my own, you need to be meeting with the Regional Service Manager. The Regional Service Manager is the Ford Motor eyes and ears in the field. If the digital image was not good enough, then you need to schedule an appointment to see that Regional Service Manager, so that he can see it in person, and authorize your warranty repair.
Finally ask which Lincoln Mercury Dealer is a Presidents Award Winning Service Center. Those dealers are the best Ford has to offer. As the company gets to be "right sized" many dealerships are going out of business... the ones that are going out of business or on hard times, will not give you the service your deserve, perhaps that is a reason they are on hard times and failing.
When you get this matter resolved, take the time to write to this web site and say something nice. Everyone is in a hurry to complain, who takes the time to give positive feedback? Will you?
Well, to begin with, the Navigator is an awful car. Bar none. Even the Escalade seems discreet and exemplary compared to this pile of crap Lincoln sells. Cars like these drove Detroit to the edge.